This text is part of the special Philanthropy section
“Donating to food banks is good. But perhaps we also need to ask ourselves why food banks are needed. » It is in these terms that Éric St-Pierre, general director of the Trottier family Foundation, explains why it was more than necessary for the federal government to authorize registered charities (OBE) to work to evolve public policies .
Until 2018, the limit was severe: an OBE could not devote more than 10% of its resources to “political activity”, a vague term that included both partisan politics and representation to ministries to modify the legal or regulatory framework. However, this barrier has since been broken. In Ottawa, the Liberal government amended the Income Tax Act (ITA) to authorize action relating to the development and implementation of public policies, which includes both advocacy and demonstration or popular education workshops.
“Typically, a large number of environmental or social organizations have fundamentally political action. The only restriction now concerns partisan activity, which remains prohibited, but an organization that wants to weigh in on the public debate now has free rein,” says David Grant-Poitras, coordinator of PhiLab Quebec, the Quebec component of the Canadian Research Network. partnership research on philanthropy (PhiLab) and doctoral student at UQAM.
“The Canadian Association of Petroleum Producers has 52 employees registered as lobbyists. OBEs must also be able to influence democratic debates,” says Éric St-Pierre. The foundation he heads, with capital of $600 million, is dedicated to having an impact on society through science, education, health and the environment. “Among other activities, we helped the City of Montreal develop its climate policy and we support two organizations pushing for a Climate Finance Act. »
Tool the foundations
This amendment to the ITA resulted from a judgment of the Ontario Superior Court in 2018 which invalidated the section of the law concerning “political activities” because it attacked freedom of expression, recalls David Grant- Poitras. The Ontario judge then ruled in favor of the organization Canada Without Poverty, which accused Stephen Harper’s government of using the ITA for the purposes of political control against environmental or social organizations.
“Several organizations had lost their charitable status, and a dozen others, such as Équiterre, the Suzuki Foundation, Écojustice, had undergone several years of rigorous audits which were costly in terms of time and lawyers’ and accountants’ fees,” says Eric St-Pierre. And Harper won in the sense that he actually harmed the environmental movement. »
According to a study by PhiLab Quebec, the 2018 changes did not provoke the great wave of philanthropic activism so hoped for by some and so feared by others. “Only ten Canadian foundations have truly political activity, but it percolates,” explains David Grant-Poitras.
Half a dozen organizations such as PhiLab, Philanthropic Foundations Canada, or the Collective of Quebec Foundations Against Inequalities cooperate and provide training to equip their members. “Foundations are starting to understand how to amplify their message,” says David Grant-Poitras. They develop advocacy strategies. »
The relaxations of 2022
These organizations have a lot of awareness-raising work ahead of them, because the federal government introduced new changes in 2022 that aim to further encourage the action of foundations in matters of public policy.
Thus, foundations are now authorized to distribute funds to “non-qualified donees”, in other words to NPOs which are not OBEs or hospitals. “This old limit deprived of resources groups helping indigenous populations or visible minorities, who had great difficulty establishing their OBE status,” explains Mr. Grant-Poitras.
The other big change concerns the increase in the “payment quota”, also called “payment quota”, which went from 3.5 to 5% of the capital. In other words, any foundation with assets of more than $1 million must now spend a minimum of 5% of its capital each year, instead of 3.5%.
“Charitable status exists because the money withdrawn from taxation must return to society,” explains David Grant-Poitras. But in what proportion, knowing that this money placed on the financial markets produces sometimes significant returns? “It’s a big philosophical and ethical debate. Some say a 5% floor is too much, others say it’s not enough. »
“We think that this is not the time to skimp,” judges Éric St-Pierre. “Canadian foundations manage approximately $100 billion in assets,” he says. If we force them to pay 5% instead of 3.5%, that’s $1.5 billion more going to United Way, or the Old Brewery Mission or any charity. »
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